DFC Global (DLLR) 4/9/12

DFC Global DLLR 4/9/12

$200m (+30m) unsec cb coming tonight from BARC. Terms: 5yr, 2.75-3.25% up 27.5-32.5, full pctns. UOP = hedge/repay debt/gcp. Happy meal for the minority. Structurally sen 10.375% 16 str8 OSA 570 bps 3% cb (put/call 04/15) backed out L+590 pre-news (using 32 vol). We’ll back 5 yr spread to L+750. Again, not a model trade but if we were to guestimate we’d have to discount vol (ADV= mere 360k, no leaps & -ve gamma on big moves down). We’d use 32v. Theo = 102.1

FACT: $4B US CB issuance ytd, $14B globally & $120B us HY ytd. $360m combined debt post deal vs. $770 mkt cap doesn’t instill comfort but w/existing cb followers, potential equity mkt interest, this small issue will get done.

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